Officials said besides the devaluation in rupee, the improvement in import duty receipts could be attributed to volume growth too. The domestic currency, which traded at 50.56 against the dollar in early April last fiscal progressively weakened to 61.11 against the greenback on July 31, 2013. The domestic currency tested new lows in August, indicating to possible further gains in customs duty.
Finance ministry sources said there could be some sobering of the impact of the devalued currency on traders as importers in India as well as overseas customers of Indian exporters tend to re-negotiate contracts which mitigates to some extent the high import cost in rupee as well as windfall gains for exporters.
While the government gains on depreciation of rupee in customs duty receipts now, it has to pay back higher amounts to exporters who have used imported raw materials on which duty may have been paid earlier when the domestic currency was stronger.
The government neutralises the element of domestic taxes on exported products by refunding those taxes to exporters who used imported raw materials based on 'duty drawback' rates. The ministry has now set up a panel led by Planning Commission member Saumitra Chaudhuri to rework the duty drawback rates in view of the devalued rupee.
India's imports grew to $160 billion or R9.1 lakh crore in the April-July period of 2013-14 compared with $156 billion or R8.5 lakh crore in the same period a year ago. Exports on the other hand, grew to $98 billion or R5.6 lakh crore in the first four months of this fiscal from $96.6 billion or R5.2 lakh crore in the same period a year ago.